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The Text of the Dodd-Frank Act
International Association of
Risk and Compliance Professionals (IARCP)
Dodd Frank Act Section 929P
SEC. 929P. STRENGTHENING ENFORCEMENT BY THE
COMMISSION.
(a) AUTHORITY TO IMPOSE CIVIL PENALTIES IN
CEASE AND DESIST PROCEEDINGS.—
(1) UNDER THE SECURITIES ACT
OF 1933.—Section 8A of the Securities Act of 1933 (15
U.S.C. 77h–1) is amended by adding at the end the following new
subsection:
‘‘(g) AUTHORITY TO IMPOSE
MONEY PENALTIES.—
‘‘(1) GROUNDS.—In any
cease-and-desist proceeding under subsection (a), the Commission
may impose a civil penalty on a person if the Commission finds, on
the record, after notice and opportunity for hearing, that—
‘‘(A) such person—
‘‘(i) is violating or has violated
any provision of this title, or any rule or regulation issued
under this title; or
‘‘(ii) is or was a cause of the
violation of any provision of this title, or any rule or
regulation thereunder; and
‘‘(B) such penalty is in the
public interest.
‘‘(2) MAXIMUM AMOUNT
OF PENALTY.—
‘‘(A) FIRST TIER.—The maximum amount of
a penalty for each act or omission described in paragraph (1)
shall be $7,500 for a natural person or $75,000 for any other
person.
‘‘(B) SECOND TIER.—Notwithstanding
subparagraph (A), the maximum amount of penalty for each such act
or omission shall be $75,000 for a natural person or $375,000 for
any other person, if the act or omission described in paragraph
(1) involved fraud, deceit, manipulation, or deliberate or
reckless disregard of a regulatory requirement.
‘‘(C)
THIRD TIER.—Notwithstanding
subparagraphs (A) and (B), the maximum amount of penalty for each
such act or omission shall be $150,000 for a natural person or
$725,000 for any other person, if—‘‘(i) the act or omission
described in paragraph (1) involved fraud, deceit, manipulation,
or deliberate or reckless disregard of a regulatory requirement;
and
‘‘(ii) such act or omission directly or indirectly
resulted in—
‘‘(I) substantial losses or created a
significant risk of substantial losses to other persons; or
‘‘(II) substantial pecuniary gain to the person who committed
the act or omission.
‘‘(3) EVIDENCE
CONCERNING ABILITY TO PAY.—In any proceeding in which the
Commission may impose a penalty under this section, a respondent
may present evidence of the ability of the respondent to pay such
penalty. The Commission may, in its discretion, consider such
evidence in determining whether such penalty is in the public
interest.
Such evidence may relate to the extent of the
ability of the respondent to continue in business and the
collectability of a penalty, taking into account any other claims
of the United States or third parties upon the assets of the
respondent and the amount of the assets of the respondent.’’.
(2) UNDER THE SECURITIES EXCHANGE ACT OF
1934.—Section 21B(a) of the Securities Exchange Act of 1934
(15 U.S.C. 78u– 2(a)) is amended—
(A) by striking the
matter following paragraph (4);
(B) in the matter preceding
paragraph (1), by inserting after ‘‘opportunity for hearing,’’ the
following: ‘‘that such penalty is in the public interest and’’;
(C) by redesignating paragraphs (1) through (4) as
subparagraphs (A) through (D), respectively, and adjusting the
margins accordingly;
(D) by striking ‘‘In any proceeding’’
and inserting the following:
‘‘(1) IN
GENERAL.—In any proceeding’’; and
(E) by adding at
the end the following:
‘‘(2)
CEASE-AND-DESIST PROCEEDINGS.—In any proceeding instituted
under section 21C against any person, the Commission may impose a
civil penalty, if the Commission finds, on the record after notice
and opportunity for hearing, that such person—
‘‘(A) is
violating or has violated any provision of this title, or any rule
or regulation issued under this title; or
‘‘(B) is or was a
cause of the violation of any provision of this title, or any rule
or regulation issued under this title.’’.
(3)
UNDER THE INVESTMENT COMPANY ACT OF 1940.—Section
9(d)(1) of the Investment Company Act of 1940 (15 U.S.C.
80a–9(d)(1)) is amended—
(A) by striking the matter
following subparagraph (C);
(B) in the matter preceding
subparagraph (A), by inserting after ‘‘opportunity for hearing,’’
the following: ‘‘that such penalty is in the public interest,
and’’;
(C) by redesignating subparagraphs (A) through (C)
as clauses (i) through (iii), respectively, and adjusting the
margins accordingly;
(D) by striking ‘‘In any proceeding’’
and inserting the following:‘‘(A) IN GENERAL.—In any proceeding’’;
and
(E) by adding at the end the following:
‘‘(B)
CEASE-AND-DESIST PROCEEDINGS.—In any
proceeding instituted pursuant to subsection (f) against any
person, the Commission may impose a civil penalty if the
Commission finds, on the record, after notice and opportunity for
hearing, that such person—
‘‘(i) is violating or has
violated any provision of this title, or any rule or regulation
issued under this title; or
‘‘(ii) is or was a cause of the
violation of any provision of this title, or any rule or
regulation issued under this title.’’.
(4)
UNDER THE INVESTMENT ADVISERS ACT OF 1940.—Section
203(i)(1) of the Investment Advisers Act of 1940 (15 U.S.C.
80b–3(i)(1)) is amended—
(A) by striking the matter
following subparagraph (D);
(B) in the matter preceding
subparagraph (A), by inserting after ‘‘opportunity for hearing,’’
the following:
‘‘that such penalty is in the public
interest and’’;
(C) by redesignating subparagraphs (A)
through (D) as clauses (i) through (iv), respectively, and
adjusting the margins accordingly;
(D) by striking ‘‘In any
proceeding’’ and inserting the following:
‘‘(A)
IN GENERAL.—In any proceeding’’; and
(E) by adding at the end the following new subparagraph:
‘‘(B) CEASE-AND-DESIST PROCEEDINGS.—In
any proceeding instituted pursuant to subsection (k) against any
person, the Commission may impose a civil penalty if the
Commission finds, on the record, after notice and opportunity for
hearing, that such person—
‘‘(i) is violating or has
violated any provision of this title, or any rule or regulation
issued under this title; or
‘‘(ii) is or was a cause of the
violation of any provision of this title, or any rule or
regulation issued under this title.’’.
(b)
EXTRATERRITORIAL JURISDICTION OF THE
ANTIFRAUD PROVISIONS OF THE FEDERAL SECURITIES LAWS.—
(1)
UNDER THE SECURITIES ACT OF 1933.—Section 22 of the
Securities Act of 1933 (15 U.S.C. 77v(a)) is amended by adding at
the end the following new subsection:
‘‘(c)
EXTRATERRITORIAL JURISDICTION.—The
district courts of the United States and the United States courts
of any Territory shall have jurisdiction of an action or
proceeding brought or instituted by the Commission or the United
States alleging a violation of section 17(a) involving—
‘‘(1) conduct within the United States that constitutes
significant steps in furtherance of the violation, even if the
securities transaction occurs outside the United States and
involves only foreign investors; or
‘‘(2) conduct occurring
outside the United States that has a foreseeable substantial
effect within the United States.’’.
(2)
UNDER THE SECURITIES EXCHANGE ACT OF 1934.—Section
27 of the Securities Exchange Act of 1934 (15 U.S.C. 78aa) is
amended—
(A) by striking ‘‘The district’’ and inserting the
following:
‘‘(a) IN GENERAL.—The
district’’; and
(B) by adding at the end the following new
subsection:
‘‘(b) EXTRATERRITORIAL
JURISDICTION.—The district courts of the United States and
the United States courts of any Territory shall have jurisdiction
of an action or proceeding brought or instituted by the Commission
or the United States alleging a violation of the antifraud
provisions of this title involving—
‘‘(1) conduct within
the United States that constitutes significant steps in
furtherance of the violation, even if the securities transaction
occurs outside the United States and involves only foreign
investors; or
‘‘(2) conduct occurring outside the United
States that has a foreseeable substantial effect within the United
States.’’.
(3) UNDER THE INVESTMENT
ADVISERS ACT OF 1940.—Section 214 of the Investment
Advisers Act of 1940 (15 U.S.C. 80b– 14) is amended—
(A) by
striking ‘‘The district’’ and inserting the following:
‘‘(a) IN GENERAL.—The district’’; and
(B) by adding at the end the following new subsection:
‘‘(b) EXTRATERRITORIAL JURISDICTION.—The
district courts of the United States and the United States courts
of any Territory shall have jurisdiction of an action or
proceeding brought or instituted by the Commission or the United
States alleging a violation of section 206 involving—
‘‘(1)
conduct within the United States that constitutes significant
steps in furtherance of the violation, even if the violation is
committed by a foreign adviser and involves only foreign
investors; or
‘‘(2) conduct occurring outside the United
States that has a foreseeable substantial effect within the United
States.’’.
(c) CONTROL PERSON
LIABILITY UNDER THE SECURITIES EXCHANGE ACT OF 1934.—Section
20(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78t(a)) is
amended by inserting after ‘‘controlled person is liable’’ the
following: ‘‘(including to the Commission in any action brought
under paragraph (1) or (3) of section 21(d))’’.
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